Kentucky Employment Law Blog

Attorney's Fees & the FLSA: the Sixth Circuit Firmly Rejects Limiting Attorney's Fees to a Percentage of the Recovery

Attorney's fees are recoverable in suits for unpaid overtime under the Fair Labor Standards Act (FLSA), and "a district court abuses its discretion if it limits the fees awardable under hte FLSA to a percentage of the plaintiff's recovery" the Sixth Circuit has held in Rembert v. A Plus Home Health Care Agency. 

The case is a pretty straightforward overtime case, remarkable mainly because (a) the plaintiffs got some good help from the Department of Labor; and, (b) defense counsel's general recalcitrance and failure to "act in accordance with his representations to the court or his obligations under the Rules." Eventually, the plaintiffs' counsel submitted a fee petition requesting an award for 119.9 hours, totaling $38,190 plus $575 in costs. The district court, after sitting on the petition for six months, "reduced counsel's total compensable hours from  a total of 119.9 to 46.2 -- a 61% reduction in compensable hours, and almost twice the reduction that defense counsel had sought." To add insult to injury, the district court, Hon. James E. Graham of the Southern District of Ohio, "cut the fee award an additional $1,660 on the ground that judges in the Southern District of Ohio 'typically approved' fee awards of no more than 35% of the 'total settlement amount' (meaning the amount of the judgment plus the amount of fees and costs awarded)," which left a total of $13,790. Plaintiffs appealed.

After reciting the lodestar calculation method, the Sixth Circuit turned to the district court's capping of the awardable fees at 35% of the total settlement amount. Capping the fees at a percentage of the recovery is an abuse of discretion, as "neither the text nor the purpose of the FLSA supports imposing a proportionality limit on recoverable attorney's fees." 

The Sixth Circuit also faulted the district court for failing to explain adequately why it had cut some of the hours submitted by the plaintiffs' counsel, especially in view of the fact that many "obtained 100% recovery due to them under the Act." First, the Sixth Circuit found it improper to exclude time devoted to gathering information from clients, since "attorneys may communicate directly with their clients" and "the law refers to an attorney-client privilege, not a paralegal-client one." Second, it was error to exclude as duplicative time devoted to communications between the plaintiffs' co-counsel, since "co-counsel may consult each other to avoid duplicative work and otherwise to maximize their efficiency and effectiveness." Third, the district court did not adequately consider to 100% recovery success rate "or that the actions and omissions of defense counsel indisputably prolonged this litigation and rendered it much less efficient than it could have been." 

The Sixth Circuit then did something extraordinary. It reviewed "both the district court's docket in this case, document-by-document, and the billing records of [plaintiffs'] counsel, line-by-line" and concluded that the "district court abused its discretion when it did not grant in full the amounts requested in counsel's fee petition." The Sixth Circuit remanded the case with instructions that plaintiffs' counsel be awarded the full requested amount and noted they were "also entitled to a reasonable fee and costs for this appeal ... which for everyone's sake we hope is not the subject of another appeal." 

Judge Raymond Kethledge authored the Sixth Circuit's opinion and was joined by Judges Eugene Siler and Julia Gibbons. 

Robert L. Abell
www.RobertAbellLaw.com

Proving a Lifting Restriction is a Disability Covered by the ADA

Although the case ultimately went south for the plaintiff and the Sixth Circuit affirmed a summary judgment, the Sixth Circuit's recent decision in Thompson v. Fresh Products is instructive regarding the proof necessary to at least create a fact issue as to whether a lifting restriction is a disability covered by the Americans With Disabilities Act (ADA). 

The plaintiff advanced a number of claims including a disability discrimination claim under the ADA. The district court, Hon. Jack Zouhary of the Northern District of Ohio, ruled that she had failed to establish "that she has a disability because she relied on 'conclusory statements,' did not have any lifting restrictions while at Fresh Products, and continued to work full-time until she was laid off." 

The Sixth Circuit disagreed on this point, citing "Thompson's testimony that her arthritis causes her pain and restricts her ability to do heavy lifting, which, in turn, affects her ability to do some jobs. Although she was not doing heavy lifting at Fresh Products, her doctor gave her lifting restrictions at a previous job. The evidence is sufficient to establish a fact dispute regarding whether Thompson has an impairment that substantially limits one or more of her major life activities, and therefore whether she is disabled under the ADA."

There's two elements here: (1) testimony by the individual as to the condition's tangible limiting and painful effects; and, (2) some medical history documenting the problem. It is not required that the condition come into play in the course of the individual's job. 

Circuit Judges Danny Boggs and Ralph Guy, as would be expected, joined to affirm the summary judgment on Thompson's disability discrimination claim; Judge Helene White dissented and would have reversed on this claim.

Robert L. Abell
www.RobertAbellLaw.com

Proof of Pretext - How Much Is Needed?

Employment discrimination, retaliation and wrongful termination cases often come down to the issue of pretext -- is the employer's explanation for doing whatever adverse was done not more than a lie, a lie offered to try and coverup something unlawful? Being caught in a lie creates all sorts of problems for employers and parties in all sorts of cases. 

The Sixth Circuit recently examined the question of pretext in Kirilenko-Ison v. Bd. of Ed. of Danville, Ky. The plaintiffs were two school nurses who voiced their concerns about the medical assistance that was being offered to two students. For their efforts, they claimed, one was suspended and the other was not hired when later a full-time opening came open. The district court, Hon. Danny C. Reeves of the Eastern District of Kentucky, granted the school board a summary judgment on all claims. The Sixth Circuit reversed.

The court found that both the plaintiffs had presented triable issues of fact on the issue of pretext. The court's discussion and examples are helpful.  First, "[a]ll that a plaintiff must show in order to overcome a defendant's motion for summary judgment at this stage is that a reasonable juror could find that the defendant's reasons were pretextual. The plaintiff does not need to prove pretext, she only needs to show that the question of pretext is a genuine factual dispute." So the proof at the summary judgment stage need not knock down the Great Wall of China, and the following was sufficient:

• the school principal screamed at them and told them to do what the parent of a child with serious health problems wanted, notwithstanding the negative impacts on the child and on their nursing licenses
  
  
• a threat that one's continued advocacy could cost her her job
  
  
• allegations in a third party's resignation letter that the school board was pressuring the nurses to go along and shut up
  
  
• one's long work history for the school board and the absence of prior disciplinary measures
  
  
• the temporal proximity between one's most strenuous advocacy and her suspension.

Here, as in all things, context is important. Consider first the supposed sins of the plaintiffs: advocating for proper and necessary medical care for students, not refusing, advocating, which would seem exactly what they were hired to do and what the Kentucky Board of Nursing requires them to do. Second, there is bullying and threatening followed by action that is at best disproportionate. That doesn't make sense; reasonable jurors could easily view this type of scenario as retaliatory and the school board's explanations unworthy of credence. 

This case is the topic of an earlier post: Causation and Lapse of Time In Retaliation Cases.

Robert L. Abell
www.RobertAbellLaw.com

 

Causation and Lapse of Time in Retaliation Cases

Causation -- the link between protected activity and an adverse employment action -- is usually time-bound and temporally proximate, meaning the adverse action follows fairly soon on the heels of the protest or report. But what about when the lapse of time is greater? 

The Sixth Circuit discussed recently in Kirilenko-Ison v. Bd. of Educ. of Danville "two situations in which even a long lapse of time is not fatal to a plaintiff's causation showing." One is where the employer "took advantage of its first meaningful opportunity to retaliate against the [employee], even if that opportunity did not arise until several months after the plaintiff's protected conduct." Second, even if more than enough time has passed to preclude a finding of causation based on close timing alone, "an employee can still prevail if she couples temporal proximity with other evidence of retaliatory conduct to establish causality." 

The plaintiffs in this case were two nurses, who voiced strident concerns about the school system was looking after two students with difficult medical conditions. One of the nurses engaged in the protected activity in May - December 2016; she was working under a three-year contract funded by a grant that lapsed at the end of June 2017. She sought full-time employment in the Fall 2017 and was not hired, despite a very solid record. The failure to rehire her was an adverse employment action, and it was "the first meaningful opportunity the school board had to retaliate against her." Therefore, the Sixth Circuit reversed a summary judgment for the school board by the district court.

Robert L. Abell
www.RobertAbellLaw.com

"you're kind of getting up there in years, you're at retirement age" = Direct Evidence of Age Discrimination

The Sixth Circuit has reversed a summary judgment granted an employer in an age discrimination case based on direct evidence of discrimination, statements by a plant manager to the plaintiff: "you're kind of getting up there in years, you're at retirement age" in Lowe v. Walbro LLC. 

The plaintiff, Robert Lowe, began working at Walbro, a maker of engine management and fuel systems for outdoor power, recreational and similar equipment, when he was 18 years old, and continued for 41+ more years before he was fired. Lowe's problems started when a 35 year old manager, Tom Davidson, was hired as the plant manager in 2016. Over the course of the next two years, according to Lowe, Davidson made some dozen or so ageist statements to him such as "Old man, you been here longer than I am old. Aren't you ready to retire?" and saying that Lowe was "losing a step." 

Walbro came up with some explanations for firing Lowe. Lowe was summoned to a firing meeting with Davidson and the human resources manager, Debbie Rard, told me was being fired after 41+ years and this discussion, according to Lowe, ensued:

I did ask [Davidson] about why -- why was I terminated? Was it my job? Was I not doing the job? ... And he just -- basically he didn't answer me. He just said, well, you're kind of getting up there in years, you're at retirement age, you go one way and the company's going the other.

This statement, the Sixth Circuit held, was direct evidence of age discrimination and required reversal of the summary judgment granted by the district court, Judge Thomas Ludington of the Eastern District of Michigan.

The Sixth Circuit opinion was authored by Judge Ronald Gilman and joined by Judge John Bush and Judge Chad Readler.

Robert L. Abell
www.RobertAbellLaw.com

 

"Grandpa," "Dinosaur", "Over the Hill," "Old and Fat"; Tell-Tale Signs of Age Discrimination

Dennis Willard, by the account offered by the Sixth Circuit, is "a successful, veteran car salesman," who ranked in the top 125 of Ford's 3,500 national salesforce. He was 63, when he was fired, and probably it could be found driven, abrasive, pushy and better at his job than any of his co-workers were at their job. The car dealer trumped up a reason to try and justify his firing. The district court, Hon. Arthur J. Tarnow of the Eastern District of Michigan, blew it and granted summary judgment to Willard's employer. The Sixth Circuit corrected this error and reversed the district court in Willard v. Huntington Ford. This is a textbook age discrimination case.

First, as noted above, Willard is a successful and veteran car salesman. Willard's success yielded further benefits: he regularly earned $100,000+ annually than his younger colleagues and he was awarded placement at a sales desk right at the front door, giving him first crack at new customers. Second, while Willard had a reputation for being pushy (a co-worker described him as an "abrasive bully"), he worked in an environment the Sixth Circuit described as "anxiety-provoking and intense" where "interpersonal friction" and "raised voices" flared occasionally. Willard was the oldest of the full-time new car salespersons, a fact that rubbed wrong his supervisors, who inquired of his retirement plans, insulted him with references such as "grandpa," "dinosaur," and "over the hill," while slowing down his transaction paperwork to favor younger salespersons. Willard was welcomed to leave when he complained of this mistreatment. The supervisors apparently believed Willard's desk right at the front door presented an unfavorable first impression, as he was told he was "too old to be sitting by the door" and that "younger salesmen" should have the spot, a comment made tellingly the week prior to Willard's firing. The supervisors also took pains to ridicule Willard in front of co-workers, describing him as "old and fat."

Willard was fired in December 2016 (about 3 1/4 years before the Sixth Circuit's ruling on appeal that he was entitled to a trial; is justice delayed justice denied?), and the employer cited Willard's disciplinary history as some justification for his firing. One prior instance in Feb. 2011 involved an instance where he blew up on the sales floor and cursed his supervisor, receiving a half-day suspension. In August 2012, he'd been suspended for a day and a half for forging a customer's signature on a transaction document, something that was completed properly. The final incident came when Willard complained to a co-worker regarding her mishandling of a transaction he'd put together, and she, according to the employer's general manager, escalated the situation to a slight physical altercation and eventually resigned. Willard was suspended initially for a week and then fired with the employer claiming that he did not show back up for work when scheduled. Willard's desk spot was assigned to a 56 year old colleague and, a mere month later, a 52 year old salesman was hired.

The Sixth Circuit began its analysis by considering the fourth factor of Willard's prima facie case, whether he'd shown "circumstances that support an inference of discrimination." Willard accomplished this in two ways: evidence that he was replaced by a younger new-car salesperson and that younger salespersons were treated better. The dealer's employee census showed the replacement since the hiring restored the number of new car salespersons to the number as of Willard's firing. The employer's argument that too much time (about a month) passed to show the new hire replaced Willard was rejected summarily: "If a month is too much time by Huntington Ford's account, what is not?" There was evidence that Willard's sales manager regularly slow-walked his transaction paperwork compared with how he handled that of Willard's younger counterparts, and this preferential treatment was sufficient to support an inference of discrimination at the prima facie stage.

Since the employer articulated a non-discriminatory rationale -- Willard failed to report back to work, his confrontation with the former employee who escalated the situation alone justified his firing and he had a disciplinary record -- the court then moved considering whether Willard had presented evidence that these reasons were false and untrue, that they were lies offered in a attempt to obscure age discrimination.

The Sixth Circuit rejected the first, because Willard testified in his deposition that he was not informed when he was to return to work following his suspension. The district court had failed to credit Willard's testimony, causing the Sixth Circuit to observe that a "plaintiff's opinion testimony is evidence, and it is for the jury to determine its relative truth and weight." Willard's "excellent" attendance record also cast further doubt on the employer's claim that Willard failed to show up for work when expected; an assertion contrary to Willard's established record as a high achiever.

As to the second reason -- the confrontation with the other employee -- the Sixth Circuit found that the record indicated the other employee "was at fault" and that Willard had acted to de-escalate the incident. The explanation was also undercut by the employer's president's testimony that he was unsure whether Willard would have been fired had he come back to work when the company claimed he was supposed to. This equivocation is contrary to the assertion that the incident required Willard's firing.

The court concluded that the employer's reliance on Willard's supposed disciplinary history, because the last incident for which he was disciplined was four years earlier. In the interim, Willard received sales awards from the dealer and from Ford. The court also cited its prior decision, Vincent v. Brewer Co., 514 F.3d 489 (6th Cir. 2007), where it concluded that a 5-6 week delay between the employer's adverse action and the last incident of supposed employee misconduct was indicative of pretext.

The statements -- those referring to Willard as "dinosaur," "grandpa," "over-the-hill," and "old and fat" -- by the employer's managing agents, who participated in the decision-making process to fire Willard, were either "an overtly negative comment about Willard's age or an ageist slur," and the retirement comments required "only a miniscule inference" to conclude they evidence an age bias and "a wish that Willard no longer work at" the car dealership.

And so Willard's case was sent back to the district court for trial, which seems unlikely to occur before 4 years have lapsed from when Willard was fired.

The Sixth Circuit's opinion was authored by Judge Karen Moore and joined by Judges Raymond Kethledge and John K. Bush.

Robert L. Abell
www.RobertAbellLaw.com

 

RICO Claims Can Arise from Wage Theft Scheme, Sixth Circuit Rules

Employees at Vitale's Italian Restaurants kept two timecards, "one reflecting the first forty hours of work, and the other, reflecting overtime hours. The employees were paid via check for the first card and via cash for the second. The pay was at a straight time rate on the second card, although it reflected hours worked in excess of forty hours in a week." As a result, "employees were deprived of overtime pay, and Vitale's did not pay taxes on the cash payments." This was the context for the Sixth Circuit's decision in Torres v. Vitale, which held that the plaintiff-employees could pursue a civil RICO claim regarding the employer's failure to pay social security and other taxes for the work time for which cash was paid.

The Sixth Circuit, in an opinion authored by Judge John K. Bush and joined by Judges Raymond Kethledge and Julia Gibbons, reversed a dismissal order by Western District of Michigan Judge Paul Maloney. The employees had sought recovery of their unpaid overtime by way of suit under the Fair Labor Standards Act (FLSA). The Sixth Circuit ruled that FLSA precludes RICO claims "to the extent that the damages sought are for unpaid minimum or overtime wages." This preclusion, however, does not extend to damages distinct from unpaid wages or overtime:

when a RICO claim ... is based on a dispute between an employer and an employee alleges damages that are distinct from unpaid wages, even if the RICO-predicate act arises from conduct that also violates the FLSA, then the RICO remedies do not fall within the ambit of the FLSA's remedial scheme and are therefore not precluded.

Based on this analysis, the Sixth Circuit affirmed dismissal of RICO claims premised on the employers' "wage theft scheme." Dismissal of a RICO claim alleging a "workers compensation insurance scheme" by the employer "benefitted by falsely reporting payroll to its insurance company, thus lowering its premiums" was also affirmed because the insurance company, not the plaintiffs, was the victim of that scheme. However, a RICO claim arising from "a tax evasion scheme through which [plaintiff] and other similarly-situated Vitale's employees were deprived of the employer's half of social security payments, and were then subjected to tax liabilities" was reinstated and remanded to determine whether the plaintiff had "pleaded cognizable damages separate from lost wages so as to state a viable RICO claim." 

This case was well-lawyered for the plaintiff by Robert Alvarez of Wyoming, Michigan.

Robert L. Abell
www.RobertAbellLaw.com

Constructive Discharge Doctrine in the Sixth Circuit

In an opinion straining at the bit to express hostility toward the Americans With Disabilities Act (ADA) as mildly as possible, the Sixth Circuit suggested that it is ready to re-examine its subjective intent requirement in constructive discharge cases. The case is Tchankpa v. Ascena Retail Group.

As to the first point, the opinion authored by Judge John Nalbandian takes pains to assure readers and possible litigants that it brooks no favor to the ADA or to employees suffering discrimination as a general matter, here's a sampling:

• The ADA is not a weapon that employees can wield to pressure employers into granting unnecessary accommodations or reconfiguring their business operations. Instead, it protects disabled employees from disability -related mistreatment – no more, no less.
  
  
• As Milton put it, “The mind is its own place, and in itself/ Can make a Heav’n of Hell, a Hell of Heav’n.” Our job is to confirm that the plaintiff’s work conditions were indeed hellish, or at least close to it.

Sixth Circuit law on constructive discharge is straight-forward. The existence of a constructive discharge “depends upon the facts of each case and requires an inquiry into the intent of the employer and the reasonably foreseeable impact of the employer's conduct upon the employee.” Smith v. Henderson, 376 F.3d 529, 533 (6^th Cir. 2004). An employer's intent can be shown “by demonstrating that quitting was a foreseeable consequence of the employer's actions.” Moore v. KUKA Welding Sys. & Robot Corp., 171 F.3d 1073, 1080 (6th Cir. 1999). This Court has stated that the ultimate question in a constructive discharge case is whether a reasonable person would have continued working in the job given the terms and conditions intentionally established by the employer. Easter v. Jeep Corp., 750 F.2d 520, 522-23 (6^th Cir. 1984).

The opinion suggests that the Supreme Court may have upended the employer's intent element of this proof in Green v. Brennan, 136 S.Ct. 1769 (2016). This seems a red herring and betrays a poor grasp of this area of law. If an employer knows or should know that it is compelling an employee to work in conditions in which a reasonable person would not continue working, it is fair to conclude that the intended the employee to quit. If the employer did not know of the condition or situation, it would seem incongruous that it should be held liable to something it knew nothing about. The Sixth Circuit's discussion of Green just goes off on a tangent to no discernible purpose. More troubling is the suggestion that a constructive discharge may require "hellish" work conditions, as opposed to that merely a reasonable person would find intolerable.

We should also note that the ADA does require in appropriate circumstances employers to adapt and change their operations to accommodate a disabled employee; see Does the ADA Require an Employer to Rethink its Processes?

Robert L. Abell
www.RobertAbellLaw.com 

 

Racism In Action at JPMorgan Chase

Last year JPMorgan Chase reached a $24 million settlement in a race discrimination case in which financial advisors claimed that "the bank practiced “uniform and national in scope” discrimination against African-American financial advisors, such as assigning them to poorer bank branches, understaffing them, and failing to include them in a program for richer clients," as reported by Fortune Magazine, "JPMorgan Chase Settles Lawsuit Claiming 'Uniform and National' Racism for $24 Million."

The New York Times today publishes a story today suggesting that racial discrimination both against customers and employees remains a practice at JPMorgan Chase: "This Is What Racism Sounds Like in the Banking Industry." 

Robert L. Abell
www.RobertAbellLaw.com

 

Independent Contractors vs. Employees; the Sixth Circuit Analyzes the Issue

Whether a worker is an employee or an independent contractor is a threshold question with regard to overtime: employees have to be paid overtime and independent contractors do not. The Sixth Circuit uses what it calls the "economic reality" test to distinguish between employees and independent contractors; there is no bright-line test, only an amalgam of factors to consider and apply in varying factual scenarios. The recent case of Acosta v. Off Duty Police Services illustrates.

Off Duty Police Services (ODPS) offers private security and traffic control services in and around Louisville, Kentucky. A typical work day might consist of "sitting in a care with the lights flashing or directing traffic around a construction zone." Both active, sworn police officers and nonsworn individuals work for ODPS doing the same type things; the sworn police officers are paid more and many people had worked regularly for ODPS for over a decade.

When someone needed ODPS's services they would go through a scheduler, who, in turn, would contact workers who met the needed qualifications. The workers could either accept or reject the offer, but there was important evidence that anyone declining a job offer would be punished, which meant no offers would be forthcoming for a while, a practice referred to as being placed in "time out."

ODPS provided some gear and equipment, but the workers had to provide some of their own, an example being an ODPS-branded shirt, the cost of which was deducted from their pay. They had to provide their own police style vehicles, which cost the nonsworn workers from $3000 to $5000.

There was minimal supervision by ODPS. At the job site, the workers had to follow the customer's instructions and wear a uniform; they were subject to grooming restrictions which were enforced occasionally.

The workers were required to sign "independent contractor agreements" when they started working for ODPS; these agreements included noncompete provisions.

The district court ruled that the sworn police officers were independent contractors, while the nonsworn personnel were employees. The Sixth Circuit reversed as to the former and affirmed the latter.

The "economic reality" test applies six factors: 1) the permanency of the relationship between the parties; 2) the degree of skill required for rendering the services; 3) the worker's investment in equipment or materials for the task; 4) the worker's opportunity for profit or loss, depending on his skill; 5) the degree of the alleged employer's right to control the manner in which the work is performed; and, 6) whether the service rendered in an integral part of the alleged employer's business. We turn to these from the easiest to the most difficult.

1. Integral Part of the Business - this asks whether the worker is doing what is the company's business, or could the company function without the services the workers provide. Since ODPS was about and only about providing the services the workers provide, this "factor cuts heavily in favor of finding an employment relationship between ODPS and all its workers."
   
2. Degree of Skill Required - ODPS required only a four hour training session for its workers, a reality favoring "employee status for all of ODPS's workers."
   
3. Investment in Specialized Equipment - This factor compares the worker's and the company's total investments. The biggest cost to the workers was the police-style vehicles that the nonsworn individuals had to obtain, which cost about $3000 to $5000, an amount, as the district court found, paling in comparison to ODPS's annualized business expenses of around $200,000.
   
4.  Permanency of the Relationship - although intermittent, at least theoretically, many of the ODPS's workers worked only for it and many more had worked for it for well over a decade. The permanence factor favors employee status.
   
5. Opportunity for Profit or Loss - This considers whether the worker can get better at his job such that he can make more money doing it than someone else can. This weighed in favor of employee status, because "ODPS's jobs required limited skill, experience or initiative" and, in any event, the workers received a set hourly wage.
   
6. Right to Control the Work - This requires consideration of whether the company tells the worker how and when to do the job. The practice of punishing the worker (placing them in "time out"), the noncompete provision in the contracts and the dress and grooming policies tipped the analysis in favor of employee status for the nonsworn individuals but was in equipoise for the sworn workers.

Robert L. Abell
www.RobertAbellLaw.com